Loading...

PROCESS

Investment Process

STEP

Seven steps to purchase

From the day you begin your search to the day you receive the keys and your rental business begins.
We set out the usual sequence in seven stages.

  1. STEP

    Clarifying your investment objective

    • Whether stable monthly income (rental income) is the priority
    • Whether you are aiming for a future gain on sale (capital gain)
    • Whether the purpose is asset preservation or succession planning

    The area and the type of property you should choose both change with the objective. Because the way you are taxed also changes depending on whether you hold the property personally or through a Japanese company, this is the ideal stage at which to consult us.

  2. STEP

    Setting a budget and funding plan

    • Confirming the funds available to you
    • Confirming whether financing (a loan) is available, and comparing terms
    • Understanding the initial costs payable in addition to the property price (registration costs, brokerage commission, various taxes and so on)

    For those not resident in Japan, whether financing is available and on what terms differs between financial institutions. If you are considering financing, please consult us before you begin looking for a property.

  3. STEP

    Selecting and investigating the property

    • Location, building age, yield and future asset value
    • Local rental demand and the vacancy situation
    • The legal conditions attaching to the building and land (zoning, road frontage, building coverage and floor area ratios, and so on)
    • For condominiums, the state of the management association, the balance of the repair reserve fund, and the history and schedule of major repair works

    We take note of your requirements and send you plans and documents. Before making a proposal we check not only the headline yield but also whether the current rent is reasonable against local asking rents, and whether there are any concerns about the state of management.

  4. STEP

    Site visit and closer examination

    • Viewing the unit (where it is vacant) and inspecting the common areas
    • Checking the state of building management, the surrounding environment, and the actual route from the nearest station

    Our representative will show you the property and survey the surrounding area at the same time. If you live far away and travelling to Japan is difficult, we can send you a package of photographs, video and local information and go through it with you online.

  5. STEP

    Purchase application and contract

    • Submitting the purchase application
    • Explanation of important matters (delivered and explained in writing by a licensed real estate transaction specialist)
    • Signing the sale and purchase agreement and paying the deposit

    The explanation of important matters covers title, restrictions under laws and regulations, the state of infrastructure, the amounts of the management fee and repair reserve, the conditions for cancelling the contract and other such points. If anything is unclear, please be sure to raise it on the spot. We can provide supplementary explanations in Chinese, English or Korean.

  6. STEP

    Settlement and handover

    • Payment of the balance of the price
    • Registration of the transfer of ownership (filed by a judicial scrivener)
    • Handover of the keys and, where the property is tenanted, transfer of the position of lessor and of the security deposit

    On completion of settlement you become the owner of Japanese real estate. If you entrust the rental management to us, the rental management agreement is signed together with the sale and purchase agreement, and we will also explain the fire insurance premium and management fee at this stage.

  7. STEP

    Rental management and asset operation

    • Tenant recruitment, screening and contracting (which can be entrusted to a management company)
    • Rent collection and remittance, and handling arrears
    • Periodic inspections, repairs to fixtures and fittings, and restoration on move-out
    • Tax procedures such as the final tax return, and management of income and expenditure

    We take on everything from tenant recruitment and move-in and move-out handling to resolving problems and addressing vacancies. Once the steps above are complete, all that remains for you is to await our reports on how the property is performing.

Indicative timescale

As a guide, roughly one month elapses between the purchase application and settlement and handover. The actual period varies with the assessment period where financing is used, the condition of the property, and the scheduling of the contract and settlement dates with the seller. Depending on availability and the type of property it can take longer than this, so we will advise you on the specific schedule case by case.

SUPPORT

How we support you

Multilingual service

In addition to Japanese, we can assist you in Chinese, English and Korean. We will also supplement the pre-contract explanation of important matters in your own language.

Site inspection and local market checks

Our representative will show you the property and report back after researching local asking rents and the vacancy situation. We ask that you make your decision only once you have seen the figures that support it.

Working with specialists

We work with judicial scriveners for registration, tax accountants for tax matters and administrative scriveners for residence status. You do not need to find them yourself; we act as your single point of contact.

Rental management on your behalf

We handle tenant recruitment, screening and contracting, rent collection and remittance, and attendance at move-in and move-out. You can run the investment while remaining overseas.

Problem handling and vacancy measures

We deal with rent arrears, equipment failures and disputes with neighbours, and where a unit remains vacant we will propose revised letting terms or restoration works.

Arranging insurance

We can arrange fire insurance and earthquake insurance for you. Premiums vary with the construction and location of the property and the scope of cover.

SIMULATION

How to model returns

According to your preferred price range, area and yield, we model the income and expenditure of several properties and present them for comparison.
Here we explain how those calculations are put together.

Gross yield and net yield

The yield quoted in a property advertisement is, in most cases, the gross yield. This is simply the annual rental income divided by the purchase price, and it takes into account neither running costs nor the transaction costs of the purchase.

Gross yield Annual rental income ÷ purchase price × 100 (%)
Net yield (Annual rental income － annual operating costs) ÷ (purchase price ＋ transaction costs at purchase) × 100 (%)

It is the latter, the net yield, that comes closer to the return you actually keep. When comparing properties, please look at net yields calculated on the same basis. All of our calculations are made in Japanese yen.

What annual operating costs include

  • Management fee and repair reserve fund (payable monthly in the case of a sectional-ownership condominium)
  • Rental management fee (where management is entrusted to a management company)
  • Fixed asset tax and city planning tax (levied annually)
  • Fire insurance and earthquake insurance premiums
  • Restoration costs and advertising fees on a change of tenant
  • The rent lost during vacant periods (allowed for as a vacancy rate)
  • Where financing is used, the interest portion of the repayments

Transaction costs at purchase

  • Brokerage commission (not payable where we are the seller)
  • Registration and licence tax (the tax on registering the transfer of ownership)
  • The judicial scrivener's fee
  • Real estate acquisition tax (the tax notice arrives some months after acquisition)
  • Stamp duty (affixed to the sale and purchase agreement)
  • Where financing is used, arrangement fees, the cost of registering the mortgage and similar items

The total of these costs varies with the price and type of the property and whether financing is used. Each of these taxes is explained in detail on the Taxes & Costs page.

Points that are easily overlooked

  • Increases in the repair reserve fund: it is common for the contribution to be raised as the building ages. A calculation that assumes the amount payable at purchase will continue unchanged will diverge from actual income and expenditure.
  • Lump-sum levies for major repair works: where the reserve is insufficient, owners may be asked for a one-off payment. Please always check the state of the management association's reserve fund.
  • Where the current rent is above the market level: the rent may fall on a change of tenant, bringing the yield below the level you had assumed.
  • Exchange rate movements: if you live overseas, the amount of your yen-denominated income when converted into your own currency will vary with the exchange rate.

*　A return simulation is provided as a reference when you are considering a purchase and is not a guarantee of future returns. Actual income and expenditure will change with the incidence of vacancies, rent revisions, repair costs, amendments to the tax system, and movements in interest rates and exchange rates.

VISA

Business Manager visa

"Business Manager" is the status of residence for establishing a company in Japan and engaging in its management.
For those considering moving the base of their life to Japan through property acquisition and business operation, we set out how the procedure works.

Where you have a partner in Japan

  1. Remit the capital for establishing the company to an account in Japan
  2. Secure premises to serve as the company's office (we can introduce these as well)
  3. Draw up the company's articles of incorporation, have them notarised at a notary public office, and file the incorporation registration with the Legal Affairs Bureau (handled by our partner judicial scrivener)
  4. After incorporation, file notification of establishment with the tax office (handled by a tax accountant)
  5. Apply for a certificate of eligibility (this requires the acquisition of real estate in Japan, or the submission of an acquisition plan)
  6. With the certificate of eligibility issued to you, apply for a visa at the Japanese embassy or consulate in your country of residence

Where you do not have a partner in Japan

  1. Travel to Japan on a short-stay visa and see the state of the Japanese market for yourself
  2. Prepare a plan for acquiring real estate in Japan, put the company's articles of incorporation in order and have them notarised at a notary public office (we assist with drafting the articles)
  3. Apply for a certificate of eligibility
  4. With the certificate of eligibility issued to you, apply for a visa at the Japanese embassy or consulate in your country of residence
  5. Travel to Japan, open a bank account and lease an office (we assist with opening the account and securing the office)
  6. File the company's incorporation registration with the Legal Affairs Bureau (handled by our partner judicial scrivener)
  7. Apply to extend your period of stay (this requires the acquisition of real estate in Japan, or the submission of an acquisition plan)

Procedures we can handle

  • Company formation (drafting the articles of incorporation, notarisation at a notary public office, and arranging the incorporation registration with the Legal Affairs Bureau)
  • Application for a certificate of eligibility
  • Application for permission to change status of residence
  • Application for permission to extend the period of stay (including where the business activity has changed)
  • Opening a bank account, and accompanying you for procedures at the ward office
  • Introducing office premises, and introducing residential properties

Our fees differ according to the procedure involved and your circumstances. Disbursements such as the notarisation fee for the articles of incorporation, registration and licence tax, and the fees of judicial scriveners and administrative scriveners are payable separately. If you would like a quotation, please contact us via the enquiry form.

A note on the requirements for the status of residence

The Business Manager status of residence carries requirements relating to the amount of capital, securing an office, the stability and continuity of the business, the employment of full-time staff and other such matters. These requirements may be changed by amendments to laws and regulations, and standards that applied in the past do not necessarily still apply. When considering an application, please always check the latest standards published by the Immigration Services Agency and consult a specialist in immigration procedures, such as an administrative scrivener. We too will advise you on the basis of the current requirements, together with our partner administrative scrivener.

Talk to us first

We can join you at any stage. Tell us your budget and what you are looking for, and we will propose a way forward.
In addition to Japanese, we can assist you in Chinese, English and Korean.

CONTACT

INVESTMENT GUIDE

GUIDE TOP